Forex Market Review – Euro broadly weaker after soft data and political uncertainty

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Euro fell against most counterparts as risk appetite was dampened by disappointing euro zone economic data and political uncertainty in the region following the first round of French elections. The single currency was hit hard after April PMI data showed euro zone manufacturing output slowed to its lowest level since June 2009. Meanwhile, separate PMI data from Germany and France, the two largest euro zone economies, also showed a sluggish manufacturing sector. The weak data fuelled fears of a sluggish recovery in the region. EURUSD fell to a session low of 1.3126 from 1.3190.

 

Sterling dipped slightly against the dollar on risk aversion but mostly remained supported due to Friday’s strong March UK retail sales data and on speculation that the Bank of England will be less likely to introduce more quantitative easing. GBPUSD opened the session at 1.6118 dipped to 1.6076 where it hovered for the rest of the session.

 

EURGBP fell on overall euro weakness, falling just one pip shy of a twenty-month low 0.8160 hit last week.

 

Yen gained against the dollar and euro due to safe haven demand as risk sentiment was dampened by negative news flow from Europe. USDJPY fell to a three-day low of 80.96 down 0.8 percent on the day so far. This is the lowest since April 18.

 

EURJPY fell on broad euro weakness, tracking the EURUSD lower. The pair fell to a European session low of 106.34, down over 1percent on the day.

 

Dollar rose against the Swiss franc on safe haven demand, lifting USDCHF to 0.9156, moving off a three-week low 0.9081 reached on Friday.

 

Aussie dollar is down almost 1 percent on the day following weak PPI data that would suggest a continued decline in Australia’s terms of trade. AUDUSD fell to a low of 1.0279. Manufacturing PMI data from China (Australia’s main trading partner) did little to help support the commodity-linked AUD. Chinese PMI is still below 50, meaning it is not in the expansion phase yet.